Wages, productivity and human capital in the european unionEconometric models and comparison with the usa 1985-2005

  1. Maria-Carmen Guisan Seijas 1
  2. Eva Aguayo 1
  1. 1 University of Santiago de Compostela, Spain.
Revista:
Applied econometrics and international development

ISSN: 1578-4487

Ano de publicación: 2007

Volume: 7

Número: 1

Páxinas: 43-56

Tipo: Artigo

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Outras publicacións en: Applied econometrics and international development

Resumo

The European Union lags behind the United States both in rates of employment and real wages. This study analyzes the relationship between wages, productivity and human capital in 5 European Union countries: France, Germany, Italy, Spain and the United Kingdom, in comparison with the USA. Firstly we analyze the role of productivity in the explanation of real wages, secondly we present a comparative study of the evolution of wages and productivity during the period 1985-2005, and thirdly we estimate an econometric model which relates real wages with productivity and productivity with human capital. As measures of human capital we have included the average total years of schooling, based on Barro and Lee estimations and lagged Research expenditure per inhabitant. The main conclusion is that the European Union should develop economic policies in order to increase the support to human capital, fostering education and RD expenditure in order to achieve higher levels of real wages and higher rates of employment and to converge towards to the levels of the United States.

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